Device Tax at Center of Government Funding Battle

As Bloomberg and others have reported, the Republican-controlled U.S. House of Representatives passed a short-term spending bill over the weekend that would, in part, repeal the 2.3% tax and delay the start of the Affordable Care Act for 12 months. Clearly, the hope is that a repeal will gain traction now that it is linked to a bill that would avoid a government shutdown. It’s unclear if the measure will survive, however.

Sens. Amy Klobuchar (D-MN) and Orrin Hatch (R-UT) are vocal opponents of the medical device tax. But they have previously said that the tax issue shouldn’t be linked to the government funding bill. Hatch instead advocated taking up the issue in a few weeks as a part of the debt ceiling fight because the continuing resolution on government spending isn’t a tax bill. Regardless, the House bill appears dead in the water, considering the Democratic-controlled Senate was expected to reject the proposed House legislation later on Sept. 30.

Even so, the inclusion of the tax repeal in the House spending bill reflects how aggressively the industry has moved to push its case. At the start of the AdvaMed 2013 conference in Washington, D.C., on Sept. 23, AdvaMed CEO Steve Ubl said his group would “look at every opportunity to repeal the device tax, such as the continuing resolution [fight] over the debt ceiling.” And during the three-day conference, AdvaMed and many of its key members lobbied Congress about the tax as it focused on the debt ceiling and government spending deadlines.

The medical device industry is trying just about anything it can at this point to win a repeal of the tax, which is intended to help pay for the Affordable Care Act. As The Nation notes, AdvaMed recently began purchasing ads in Politico to make its case. The industry also launched a website dubbed no2point3.com to nudge device companies into joining the Congressional lobbying effort against the 2.3% tax. Companies including Boston Scientific ($BSX), Medtronic ($MDT) and CareFusion have thrown money to lawmakers’ political campaigns if they supported repealing the tax, according to the article.